Tuesday, February 03, 2009

As usual, something fishy

Numbers can be intimidating, and hence, impressive when used to argue a point. Economic Planning Secretary Ralph Recto knows this and when he said the government plans to boost the slowing economy thru a P300 billion resiliency fund, he expects us to say wow.

If Vilma's husband is correct, the P300 billion fund that government shall spend for infrastructure and other social services will pump up government expenditure and will increase income in the private sector. The private sector's bigger income will in turn translate into increased private spending.

This is of course founded on the Keynesian idea that money spent by the government will be money earned by the private sector, and that increased government spending will jumpstart a series of increased private spending. Think The Core and how Hilary Swank and company fired nuclear missiles into the earth's liquid iron core, one at a time, to create ripples that will merge on each other and create bigger ripples.

This is supposedly a good thing, since developing countries, like the Philippines, depend heavily on consumption to drive its economy. It does make sense, but I have a problem with this. If the ultimate goal is increased public expenditure, is the P300 billion fund the only way to achieve this end?

How about raising the minimum wage levels to increase public income? How about funneling the P300 billion fund straight into the national budget? This year's national budget of P1.4 trillion is only about 13 percent more than last year's P1.236 trillion. This 13 percent increase is even diluted by an inflation rate of about 9 percent.

Also, the details of where the resiliency fund will come from and how exactly it will be spent remain a hazy sketch. Are they deliberately separating 300 billion from the national budget to avoid transparency and accountability?

Recto's report is impressive, but it isn't "wow." It's "whoa."


gentle said...

whoa, wait. :) wage increase ang kelangan!

Victor Gregor said...

yeah. yun lang nga, in our dreams.

Mr. Scheez said...

Last thing I heard, the government plans to borrow 12B Pesos from SSS funds. For the Philippines version of "Stimulus Plan".

12B Pesos = Stimulus Plan = 2010 Elections. Go figure. =)

Victor Gregor said...

@Mr Scheez: yeah. "stimulus plan." gaya-gaya.